National Audit Office said breaches included “irregular credit guarantees”, “irregular collateral” and “fraudulent and underpayment of registered capital”.

There are growing concerns about the amount of bad loans being held by local governments.Official figures show they held debt of 10.7tn yuan ($1.7tn; £1.1tn) in 2010.

“The State Council is studying proposals to enhance local government debt management and to address fiscal and financial risks,” the audit office said in the report.
‘Again and again’
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A lot of the local debt will be absorbed by the central government”
Michael Pettis Peking University

Local governments have been borrowing money from Chinese banks to fund projects aimed at maintaining economic growth.

According to the China Banking Regulatory Commission, local governments took up 80% of total bank lending in China at the end of 2010.

However, analysts said that although the lending had helped to spur investment and boost growth, it was now weighing on local governments.

“Whenever you look at lending that spurs growth miracles, it starts off with an increasing ability to pay the debt,” Professor Michael Pettis of Peking University told the BBC.

“But in every case that ability fades. That is the process that is happening in China,” he explained. “We are going to see stories like this again and again.”
Easing burden?

In October last year, China allowed four local governments to sell bonds for the first time in 17 year. It was hoped the sale would help them pay their loans.

However, the central government put a limit on the amount of bonds the local governments could issue despite the fact that there was a lot of interest among investors.

According to the Xinhua news agency, Shanghai’s bond sale received bids for three times the amount of bonds on offer.

As a result, many of the local governments still have sizeable debts and while the central government may let them raise money, it may also have to take further measures to solve the problem, analysts said.

“A lot of the local debt will be absorbed by the central government,” said Mr Pettis of Peking University.

Asian markets down on European discord

HONG KONG: Asian markets mostly fell on Friday as a meeting between the eurozone’s three biggest economies highlighted their differences on finding a solution to the region’s debt crisis.

Traders remained nervous at the end of a week that saw fears over Europe deepen as the yields on Italian and Spanish bonds sat dangerously high and even Germany — the bloc’s pillar — failed to sell all its bonds at auction.

Tokyo was flat, edging down 5.17 points to end at 8,160.01, while Sydney shed 1.48 percent, or 59.90 points, to end at 3,984.3 and Seoul closed 1.04 percent, or 18.66 points, lower at 1,776.40.

Shanghai was 0.60 percent off and Hong Kong fell 1.21 percent in the afternoon.

The leaders of Germany, France and Italy on Thursday met to discuss plans to address the two-year-old debt crisis in a bid to sooth markets, which have been hammered over fears of a collapse of the eurozone and another global downturn. (AFP)

A team of experts reached the conclusion after monitoring Breivik in prison, said the public prosecutor who submitted their report to the court.Breivik admits to twin attacks on 22 July 2011, which killed 77 people.The original psychiatric analysis said he was insane.The two court-appointed psychiatrists reached this conclusion after interviewing him on 13 occasions.

Their report said 32 year-old Breivik lived in his “own delusional universe where all his thoughts and acts are guided by his delusions”.

The expert team of four psychiatrists assessing Breivik in prison disagreed with several of the original conclusions.

According to the report submitted by the Public Prosecutor, Svein Holden, they do not believe Breivik is psychotic or schizophrenic and do not think he needs drugs.

cientific controversy’

Breivik is due to go on trial on terrorism charges on 16 April, regardless of whether or not he is regarded as sane.

As things stand, a guilty verdict would see him placed in psychiatric care rather than in prison.

The court is expected to decide within the next few weeks whether or not to order a new psychiatric evaluation.

Mr Holden said he would not be calling for a new assessment, despite the conclusions in the latest report.

A lawyer representing the families of three of Breivik’s victims, John Arild Aasen, told Norway’s TV2 channel the latest assessment was very important.

“It indicates that there is considerable scientific controversy and the necessity for further investigations, obviously,” he said.

“We are afraid that the conversations that the experts have had with Breivik are not sufficient to reveal his real psychiatric situation.”

Asked what his clients’ thought, Mr Arild Aasen answered: “Their biggest fear is that he will be out on the street again in a few years”.

Lawyers for Anders Behring Breivik say they are opposed to any new assessment.

“There is already a very detailed forensic medicine evaluation of the accused,” lawyer Vibeke Hein Baera said in a letter released by the court